What is an SBA 7(a) loan and how does it work?

The SBA 7(a) is the Small Business Administration's most common loan program. The SBA doesn't lend directly — it guarantees 75-85% of loans made by approved lenders, reducing lender risk and enabling better terms for borrowers. Loan amounts up to $5 million, terms up to 10 years for working capital (25 years for real estate), and rates typically WSJ Prime + 2.75-4.75%.